IN THE UNITED STATES DISTRICT COURT

 FOR THE SOUTHERN DISTRICT OF OHIO

 EASTERN DIVISION

Joy L. Baird, et al., :

 

Plaintiffs, :

 

v. : Case No. 2:11-cv-634 

 

Unum Group, et al., :

 Magistrate Judge Kemp

Defendants. :

 

 

 OPINION AND ORDER

Plaintiffs Joy and Jack Baird filed this ERISA-based action

after Joy’s workplace insurer, Unum, terminated long-term

disability benefits which had been awarded to her in 1994. Unum

also told Joy that she should only have received benefits for two

years and that it had overpaid her to the tune of some

$180,000.00. She has exhausted her administrative remedies. In

this case, she seeks reinstatement of her benefits, an award of

past due benefit payments, and a finding that she is eligible to

keep getting benefits until she turns 65, which will happen in

2015. 

Unum filed the administrative record under seal on October

11, 2011. After efforts at mediation failed to resolve the case,

Joy filed a motion for judgment on the administrative record on

May 15, 2012. Unum responded on June 15, 2012. Joy did not file

a reply brief. The case is now ready to decide, and will be

decided by the Magistrate Judge pursuant to the parties’ consent

and the Court’s order of reference entered pursuant to 28 U.S.C.

§636(c). For the reasons which follow, the Court decides this

case in favor of the defendants and directs the Clerk to enter

judgment in their favor.

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 I. The Facts.

The parties have stated the facts accurately in their

memoranda, and few of them are disputed. It is helpful to note

at the outset that this is not a case about whether Joy is

disabled. The reason her benefits were terminated has nothing to

do with her medical condition. Rather, Unum based its decision

on a limitation in the policy that, in its view, capped Joy’s

benefit period at 24 months. Were that the case, Unum should

have stopped paying her benefits in 1996. Unum claims that the

error which caused it to keep paying her after that date was not

discovered until 2010. When it came to light, Unum stopped her

payments. Joy argues that the record does not support that

decision.

There are not many documents in the record that bear on this

issue. One, of course, is the policy issued to Joy’s employer, a

company now known as GATX Logistics. In Section I, entitled

“Policy Specifications,” eligible employees are divided into two

classes: “[e]xempt employees with a salary grade of 25 and

higher,” and “[e]xempt employees with salary grades of 20 through

24.” (Doc. 19, PAGEID #121)(“PAGEID” numbers are generated by

the Court’s electronic filing system, and the Court will use

those numbers when it refers to the administrative record). 

Section I(3) of the policy specifies the “Maximum Benefit

Period.” For Class 1 employees who become disabled at less than

60 years of age, the maximum benefit period is “[t]o age 65 but

not less than 60 months.” Id. For Class 2 employees who become

disabled at less than 68 years of age, the maximum benefit period

is “2 years.” Id. at #122. The policy makes it clear that

“[d]isability benefits will cease on the earliest of,” among

other dates, “the end of the maximum benefit period.” PAGEID

#130. Somewhat oddly, however, the policy also defines

disability for a Class 2 employee as meaning, first, that the

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employee (or insured) “cannot perform each of the material duties

of his regular occupation,” and then, “after benefits have been

paid for 24 months, the insured cannot perform each of the

material duties of any gainful occupation for which he is

reasonably fitted by training, education or experience.” PAGEID

#126. It is curious that if a Class 2 employee cannot recover

more than 24 months of benefits under any circumstances, the

drafters of the policy found it necessary to define under what

circumstances such an employee would be considered disabled after

that time. More on that later.

Notwithstanding this apparent inconsistency, it seems plain

that the policy intended to tie payment of benefits to employees

who meet the definition of disability to two factors: age and

salary grade, which is translated into “class.” Everyone agrees

that Joy was less than 60 years of age when she became disabled. 

The crucial question is whether she was a Class 1 or a Class 2

employee. The policy does not define or explain the differences

in these two types of employees beyond the salary grades recited

above; presumably, the employer was the one who set the salary

grades of its employees, and the policy meant to refer to those

grades.

As noted, only a handful of documents speak either directly

or tangentially to this issue. It is true that, in connection

with some offers made by Unum to pay Joy a lump sum rather than

continued monthly payments, Unum represented that “Ms. Baird’s

group disability policy provides a monthly benefit that will

continue for the duration of her lifetime, or age 65, whichever

is less, as long as she continues to meet the policy definition

of disability.” (Doc. 19, PAGEID #183). And it is apparent that

Unum believed this statement, made in 2004, to be correct, or it

would not have been offering her a buyout based on an actuarial

calculation of the value of her continuing stream of payments. 

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In fact, it concedes as much, stating that it was mistaken about

her maximum benefit period all the way up to 2010. Its

calculation forms also show that her benefits continued to age

65. See, e.g., Doc. 19, PAGEID# 187. On the other hand, a

document entitled “New Claim Checklist” which begins at PAGEID

#266 contains a handwritten note on the second page which says

“Salaried Class 2.” Someone also checked off boxes which show

Joy to have been a member of “Eligible Class” and that the “Class

#” was “2.” PAGEID # 267. Those documents appear to have been

completed by Unum in 1994 when Joy submitted her claim. Another

Unum-generated document, entitled “Management File Review,”

PAGEID #425, which appears to be dated December 23, 1994, has the

number “24" in a box titled “Claim Duration,” which could also

have been a reference to the 24-month maximum benefit period.

There is other evidence from which it can be inferred that

Unum should have appreciated, from the beginning of the claim,

the fact that Joy was a Class 2 employee. Its initial letter

awarding her benefits, dated July 26, 1994, told her that

benefits were “payable as long as you continue to remain disabled

as defined and meet all other provisions as outlined in the

contract,” and it quoted the definition of disability that

applied only to Class 2 employees. PAGEID #435-36. In 1995 and

1996, a Unum Disability Benefit Specialist, Beverly Valdez, wrote

Joy two letters dealing specifically with the question of

determining her continuing eligibility for benefits. Given the

maximum benefit period stated in the policy, one would have

thought that these letters would simply have told Joy she would

not get any payments after 24 months had elapsed. Instead, each

letter, like the initial letter, cited to the policy provisions

defining “disability” and “disabled” for Class 2 employees. 

PAGEID #359, #408. The first letter, sent in June, 1995, advised

Joy that Unum was “beginning to review your eligibility for

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benefits beyond the 24th month.” The second, written on January

26, 1996, addressed the specific issue of “benefit eligibility

beyond 02/10/96,” (which happens to be the two-year or 24-month

anniversary of her first benefit payment) and told Joy that she

remained “eligible for benefits at this time.” Again, in

somewhat contradictory fashion, the letter also said that

“[b]enefits will continue to 02/10/96 ... provided you remain

disabled according to the terms of the policy.” PAGEID #359.

Unum continued to pay benefits after February 10, 1996, however,

and periodically asked Joy to update her medical records so that

it could continue to judge her eligibility for benefits. See,

e.g., PAGEID #353 (1996 letter from Brendan O’Donnell, Disability

Benefit Specialist, to Joy Baird); PAGEID #528 (2007 letter from

Judith Boucher, Benefits Center Representative, to Joy Baird). 

It also seems that Unum sometimes reviewed “the policy” when, for

example, determining in 2009 that it had slightly underpaid Joy

over the 15-year period during which she received benefits. See

PAGEID 560-61.

2010 is when things changed. A document with a “Notify

Date” of February 18, 2010, states this:

Following extensive review of claim it has been

determined that the claimant was only entitled to 24

months of benefit payments. She falls under class 2

which is “All Exempt Employees with salary grades of 20

through 24" and she was confirmed as salary grade 23

during TPC w/ ER on 06/20/94 which is contained in the

paper claim file.

The claims system read correct duration of 24 months. 

Correct policy was contained in claim file. The

duration was manually overriden to be to the age of 65

and is not supported by the policy.

PAGEID #624. Joy was advised of this problem on February 26th of

that year. Her attorney, Bruce Hyslop, then asked for

documentation of the fact that she was a Class 2 employee. In

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response, Unum sent Mr. Hyslop a letter attaching a document

headed “Claim File Documentation” reflecting a telephone call

with Sherri Cagle sometime in June, 1994. The notes indicate

that “she” (no specific name is in the notes) was at pay level 23

effective on June 3, 1991. Joy Baird’s name does not appear

anywhere on this document, which is PAGEID #652.

II. The Administrative Appeal

Joy’s appeal of the decision to terminate her benefits was

made through a letter written by Mr. Hyslop to Unum on May 14,

2010. In that letter, Joy contested the determination of her

salary grade, stating that “[w]e can only assume that the proper

examiners with proper information determined that Joy was a Class

1 employee.” She also argued that the document Unum relied upon

did not sufficiently identify her and there was no explanation of

how it had been misplaced or lost for sixteen years. Finally,

she noted that a large number of Unum representatives had, over

the years, approved continuing her benefit payments. She also

raised some state law issues such as detrimental reliance,

laches, and bad faith. See PAGEID #662-665.

Unum decided the appeal on June 15, 2010. It concluded that

although Unum had correctly been advised that Joy was a Class 2

employee (and it provided a detailed explanation of why it

believed the recently-uncovered notes of the telephone

conversation with Sherri Cagle did, in fact, relate to Joy’s

claim - mostly because Ms. Cagle was Unum’s contact person at

Joy’s employer and the note is dated the same day as a telephone

call between Joy and Unum about her claim), when a “system

generated document” (which appears to be PAGEID #358) from 1996

showed that the benefits period had expired, that document was

manually overriden by one of its benefits specialists, Brendan

O’Donnell, who apparently thought that the reason benefits were

set to expire was that Joy’s disability had been incorrectly

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designated as psychological rather than physical, and that only

psychological benefits expired after 24 months. That mistake was

not detected until the 2010 file review took place. Unum

responded to the state law issues by noting that it had waived

any recovery of the overpayments. Because that was Unum’s final

decision, Joy then filed this lawsuit.

III. Discussion.

Each party has submitted a fairly short memorandum. They

recognize that Joy’s claims arise exclusively under ERISA, and

specifically 29 U.S.C. §1132, and present their arguments in that

context. Joy’s argument is simply that the document used by Unum

to support its decision - the note of the telephone call to

Sherri Cagle which does not contain Joy’s name or make specific

reference to her claim - does not outweigh the sixteen-year

history of approval of payments to her as if she were a Class 1

employee. Therefore, she must have been such an employee. If

not, however, she argues that Unum did not give her timely notice

of its action as required by 29 C.F.R. §2560.503-1(f)(3); had it

done more promptly, she might have been able to show that her

employer regarded her as a Class 1 employee, but due to the

passage of time she cannot do so now.

Unum’s argument is similarly straightforward. It does

address, briefly, the standard of review which the Court must use

here (Unum argues for an arbitrary and capricious standard, but

also contends that its decision should be upheld even if the

Court’s review is de novo) - and contends that the key document

bears enough evidence of authenticity and of a relationship to

Joy’s claim to make Unum’s reliance on it reasonable. It

responds to the timeliness argument by noting that it acted very

promptly after it discovered its mistake and, in any event, the

complaint does not plead a claim based on the lack of timely

notice. 

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A. Standard of Review

In any ERISA case, it is important to identify, at the

outset, the proper standard of review. There is a significant

difference in the way the Court conducts its analysis if the

question is whether the plan administrator’s decision is

arbitrary and capricious, as opposed to whether the Court would

independently reach the same decision from the administrative

record. This plan does not contain more typical language vesting

discretionary authority in Unum to make benefit decisions, so the

question is whether the plan language Unum relies on in arguing

for the more lenient standard of review is legally sufficient to

justify that type of judicial scrutiny.

Unum cites to some of the policy’s general provisions in

support of its argument for an arbitrary and capricious standard

of review. As it notes, the policy requires that an applicant

for benefits submit a proof of claim and it allows Unum to ask a

beneficiary to submit to either an interview or a medical

examination, or both. These provisions, says Unum, “demonstrate

the requisite discretionary authority.” Unum’s Brief in

Opposition, Doc. 27, at 5 n.3. Unum cites no case law to support

this particular argument, and the cases from the Sixth Circuit

Court of Appeals are not particularly helpful to Unum’s position. 

Although Unum correctly notes that no “magic language” is

needed in order for a plan to vest discretionary authority in the

administrator to determine eligibility for benefits or to

construe the language of the plan, there must be some language

that does so. Thus, in Perez v. Aetna Life Ins. Co., 150 F.3d

550 (6th Cir. 1998), the Court found that a plan provision

requiring “satisfactory evidence” of disability was enough to

vest discretion in the administrator. However, in Hoover v.

Provident Life and Acc. Ins. Co., 290 F.3d 801 (6th Cir. 2002),

it deemed the absence of the word “satisfactory” to be

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significant, noting that provisions which merely require “proof”

of loss do not, by themselves, create the type of discretion

required to support an arbitrary and capricious standard of

review. The Hoover court also “reject[ed] the idea that [the

administrator] reserved itself discretion by providing that it

may require physical examination at its own expense.” Id. at

808. Again, it focused on the fact that the policy did not

require that the examination produce satisfactory evidence of

disability. 

The same is true of Unum’s policy here. Other judges of

this Court have construed similar language - in fact, arguably

broader language that requires “due proof” of disability - not to

vest discretion in the plan administrator. See, e.g., Rist v.

Hartford Life and Acc. Ins. Co., 2011 WL 2489898 (S.D. Ohio Apr.

18, 2011), adopted and affirmed 2011 WL 2559372 (S.D. Ohio June

21, 2011). And the Court of Appeals has, in an unpublished

decision, considered what would appear to be similar if not

identical provisions of a Unum policy as not vesting in Unum the

kind of discretion needed to support an arbitrary and capricious

standard of review. See Torello v. UNUM Life Ins. Co. of

America, 201 F.3d 441 (6th Cir. December 3, 1999). Other courts

considering identical policy language have also rejected Unum’s

argument. See, e.g., Tavares v. Unum Corp., 17 F.Supp. 2d 69

(D.R.I. 1998). This Court concludes that Unum has not met its

burden of proof as to the arbitrary and capricious standard of

review, and that the Court must review Unum’s decision on a de

novo basis.

It is important to describe what a de novo review entails in

the context of an administrative decision made under an ERISA

plan. The Court does not take new evidence. Rather, it must

“review the administrator's decision de novo, that is without

deference to the decision or any presumption of correctness,

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based on the record before the administrator.” Perry v.

Simplicity Engineering, 900 F.2d 963, 966 (6th Cir. 1990). As

this Court has said, that means the district court “must consider

‘the proper interpretation of the plan and whether an employee is

entitled to benefits under it’” when it decides such a case. 

Mitchell v. First Unum Life Ins. Co., 65 F.Supp. 2d 686, 692-93

(S.D. Ohio 1998), quoting Perry, supra, at 966-67.

B. The Merits of Joy’s Claim.

Most cases require the Court to resolve both issues of fact

and issues of law, and this one is no different. The Court

begins with the key issue of fact: Joy’s status as either a Class

1 or Class 2 employee.

It certainly would have been helpful had there been more

evidence before the administrator on this issue. For example,

any evidence from Joy’s employer as to what it meant by the

various pay grades described in the plan, or how it determined

that an employee was within a certain pay grade, would have shed

a good deal of light on the question of where Joy fell on that

scale back in 1993. Nevertheless, as Perry indicates, the Court

cannot take additional evidence on that point, at least where

there was an opportunity (as there was here) for Joy to have

submitted additional evidence to the plan administrator. She did

not, so the Court must look to the existing record for evidence

as to her pay grade.

There is no question that evidence exists to support the

proposition that she was a pay grade 23, or at least that she

fell within the plan’s definition of a Class 2 employee. In

addition to the notes of the call to Sherri Cagle, which does

contain enough circumstantial evidence to persuade the Court that

it more likely than not pertains to Joy’s claim, there is the

“New Claim Worksheet” which clearly deals with her claim and

which says, at PAGEID 267, that she is a Class 2 employee. There

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are also the various letters written by Unum employees which

consistently cite the definition of disability which applies to

Class 2, but not Class 1, employees. There is the letter (PAGEID

#359) which states directly that Joy’s eligibility for benefits

was confirmed through February 10, 1996, the 24-month anniversary

of the granting of her claim - a date which, if 24 months were

not a relevant time period, would have little meaning. And there

are documents that suggest at least a plausible explanation for

Unum’s failure to enforce this limit, including the transfer of

responsibility for Joy’s claim to a different office and

different Unum employee only a few days before the end of the 24-

month period, see PAGEID #357 (Letter from Brendan O’Donnell to

Joy Baird dated February 5, 1996, explaining that her claim was

going to be administered out of Unum’s home office in Portland,

Maine - it had previously been in the Atlanta, Georgia office),

and Mr. O’Donnell’s subsequent override of a Unum’s system, which

had terminated Joy’s benefits as of February 10, 1996. 

By contrast, the evidence that Joy actually was a Class 1

employee is virtually nonexistent. Not a single document in the

file says she was. Certainly, Unum treated her that way after

Mr. O’Donnell intervened in 1996, at least in terms of paying

benefits, but it never generated a letter which alluded to the

standard of disability applicable to Class 1 employees. Its

numerous file reviews after that date could not have reasonably

led any of Unum’s representatives to conclude that they were

dealing with a Class 1 employee, because nothing in the file

supports that conclusion. Unum’s employees did conclude,

apparently, that they were dealing with someone who was entitled

to benefits up to age 65, but the record indicates that at

various times (but not at the exact time Joy became disabled)

Class 2 employees were entitled to that longer benefit period, so

the fact that she was a Class 2 employee may not have been a red

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flag to those reviewers as long as they did not independently

confirm which version of the policy was in effect at the time her

disability began. Overall, the evidence that she was a Class 2

employee, while not terribly strong, is more persuasive than the

evidence she was a Class 1 employee, and the Court so finds.

The legal impact of that determination seems clear. Joy has

not argued that, as a Class 2 employee who became disabled in

1993, she was entitled to more than 24 months of benefits under

the policy in effect at that time. The policy states clearly in

two different places that the maximum benefit period for Class 2

employees, no matter what the cause for their disability, is 24

months. Although it also includes a definition of disability for

Class 2 employees which discusses what they need to prove after

receiving 24 months of benefits - something that is precluded by

other provisions in the policy - that definition would be useful

if, as happened here, the policy were changed from time to time

to allow Class 2 employees to receive more than 24 months of

benefits. Since Joy has not made an argument that even if she

were properly determined to be a Class 2 employee, this

particular policy can somehow be construed in a way that entitled

her to more than 24 months of benefits, her claim under the

policy itself must fail.

The only other issue she raises here is the lack of timely

notice. The regulation she cites, 29 C.F.R. §2560.503-1(f)(3),

has this to say about timely notice:

Disability claims. In the case of a claim for

disability benefits, the plan administrator shall

notify the claimant, in accordance with paragraph (g)

of this section, of the plan's adverse benefit

determination within a reasonable period of time, but

not later than 45 days after receipt of the claim by

the plan. This period may be extended by the plan for

up to 30 days, provided that the plan administrator

both determines that such an extension is necessary due

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to matters beyond the control of the plan and notifies

the claimant, prior to the expiration of the initial

45–day period, of the circumstances requiring the

extension of time and the date by which the plan

expects to render a decision. 

By its terms, this section would not appear to apply to

situations where a claim is granted. Most situations where a

claim is granted, and then benefits are terminated at a later

date, do not allow for the termination decision to be

communicated “not later than 45 days after receipt of the claim

by the plan.” Joy does not dispute that she received timely

notice of Unum’s decision to terminate her benefits after Unum

came to that decision in 2010. Further, if there is

noncompliance with this regulation, the proper remedy is not

ordinarily to award benefits but simply to cure whatever timing

problems the lack of compliance caused, see Murphy v. Wal-Mart

Associates' Group Health Plan, 928 F.Supp. 700, 708

(E.D. Tex. 1996), unless the plaintiff can show that the “failure

to provide proper notice affected the outcome of the decision.” 

Smith v. Blue Cross Blue Shield of Massachusetts, Inc., 597

F.Supp. 2d 214, 222 (D. Mass 2009). 

Joy has suggested that the long delay in notifying her of

her lack of eligibility for more than 24 months of benefit

payments may have affected her ability to show that she was a

Class 1 employee. However, she did not submit any evidence to

the administrator in support of that claim, nor did she submit

any evidence at all to suggest that, if given more time, she

might be able to produce evidence that she actually was a Class 1

employee. Since this Court is, again, limited to the

administrative record, it cannot find that Joy was prejudiced by

any delay here, even were the Court to conclude (which it does

not) that, as a matter of law, Unum violated 29 C.F.R. §2560.503-

1(f)(3). Thus, this argument, which is the only other one raised

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in Joy’s motion for judgment on the record, also fails. 

IV. Conclusion and Order

For the reasons set forth in this Opinion and Order, the

Court denies Plaintiffs’ Motion for Judgment on the

Administrative Record (#26) and grants judgment to defendants

Unum Group and Unum Life Insurance Company of America on her

claims. This case is dismissed with prejudice. The Clerk is

directed to enter judgment in favor of the defendants.

/s/ Terence P. Kemp 

United States Magistrate Judge

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